A faculty member has sued Columbia University, alleging it violated its fiduciary duties by paying “unreasonable and greatly excessive fees” for record-keeping, administrative and investment services for two university 403(b) plans.
“Instead of using its sophistication to identify and select high-quality investments that benefited participants and beneficiaries, Columbia University selected and retained expensive and poor-performing options,” said the lawsuit, filed Tuesday in U.S. District Court in New York. In addition to the university, the lawsuit named as a defendant Dianne Kenney, the vice president of human resources, who has “authority to administer the plans.”
The suit, which seeks class-action status, was filed by a person whose name and job title were not disclosed. According to the lawsuit, Jane Doe et al. vs. Columbia University et al., “Jane Doe” has been a participant in the two Columbia University plans since October 2014. She alleges the plans lost $100 million due to assorted fiduciary breaches of duty. She is represented by law firm Sanford Heisler LLP.
Earlier this month, a series of eight plan fiduciary breach lawsuits were filed against large private universities by the law firm of Schlichter, Bogard & Denton. “Columbia is proud of the retirement benefits offered to its faculty and staff and takes its responsibility as a fiduciary seriously,” Caroline Adelman, a university spokeswoman, said in an e-mail. “Columbia does not comment on pending litigation.”
According to the lawsuit, the two plans — the Retirement Plan for Officers of Columbia University and the Columbia University Voluntary Retirement Savings Plan — had combined assets of more than $4.6 billion as of year-end 2014 and more than 100 investment options.
“Defendants' actions caused participants in both plans to pay excessive administrative and record-keeping fees in violation of ERISA's requirement that fees be reasonable,” the lawsuit said.
The plan managers also “failed to prudently consider or offer dramatically lower-cost investments that were available to the plans, including identical mutual funds in lower-share classes,” the lawsuit said.